What to consider when acquiring or investing in a food business or product

When buying or investing in a food business, brand or ingredient, there is the need for due diligence, market insight, and regulatory and scientific support.

The food industry has always provided fertile ground for investors. The multiplicity of investment opportunities in food and beverage from individual brands and concepts to food focussed retail, wholesale, catering or online businesses offers infinite scope. In 2017, the global food and drink market was estimated to be worth over $5650 billion, with growth over the last four years seen particularly in Asian markets.

Unsurprisingly the US was ranked the largest food and beverage market in the world in 2016 and is predicted to remain in that position until 2026, followed by China in second place, then India and the UK1. The agri-food sector in the UK contributed 
£121 billion (6.7%) to national gross value added in 2017.

The size and scale of food and drink related businesses range from global conglomerates to tiny start-ups; the latter often prove appealing as they provide potential for rapid growth and return on investment by operating in an agile, innovative and disruptive way through having a closer, often more direct relationship with consumers.

For many investors, now is an unprecedented and exciting time to be entering this space. Fuelling the market are highly skilled entrepreneurs bringing edgy, innovative products to market swiftly. These factors converge to produce maximum disruption
and agitation. Strong consumer interest in challenger brands who meet the healthier eating and drinking aspirations of millennials, has caused a surge in investment interest in these brands. This is because they are perceived as being more agile to meet the discerning wants and needs of a digitally native younger generation, standing in stark contrast to many established brands who have been slower to respond to rapidly evolving and burgeoning consumer demands.